Based on fresh research, the typical worker in the UK would have to work over five decades of income to achieve the wealth level of the wealthiest 10% in the country.
Growing Financial Divide Over Time
This research analyzed financial assets information from the Covid pandemic period and determined that back in the mid-2000s, it would have needed 38 years of median full-time earnings to join the wealthiest decile of the economic ladder.
A senior economist part of the study observed: "Financial divides in Britain are presently so substantial that a regular employee setting aside their entire income across their entire working life would remain unable to achieve the peak of the wealth ladder."
Measuring the Economic Gap
The study revealed that the gap between the wealth of the average person and an individual in the wealthiest decile was £1m in the mid-2000s, but had increased to £1.3 million in inflation-adjusted terms by recent times.
The researcher further stated: "These disparities are doubly concerning as economic movement in Britain is low – people that start life affluent tend to stay wealthy, and the opposite holds true."
Relative Wealth Inequality
Although the economic divide expanding in absolute terms, the share of overall assets in the UK owned by the wealthiest families – termed "relative wealth inequality" – has been "largely unchanged since the eighties," as stated in the research.
During this period, overall assets in the UK increased dramatically from three times the yearly economic output, to almost 7.5 times.
Contributors of Financial Divide
So-called "unearned" increases, through growing real estate costs and changes in pension valuations, were the key contributors of the widening wealth gap over the past decade, as stated in the study.
These gains generally flowed to older, property-owning households, the analysis reveals – worsening the age-based economic gap.
Generational Wealth Disparities
The median economic difference between thirty-somethings and those in their early 60s grew by more than 100% in real terms, from £135k in pre-financial crisis, to £310k.
Regional Variations
Furthermore, the study revealed pronounced regional variations, with the typical amount of wealth in 2020-22 reaching 290 thousand pounds in south-east England, where real estate values have generally grown substantially, as opposed to £110k in the NE of England.
Pandemic Period Consequences
Throughout the COVID period, when numerous employees were covered under the taxpayer-backed furlough scheme, and health crisis restrictions reduced expenditure possibilities, the statistics indicate countless homes were able to save, enhancing their financial standing.
Higher-income households performed significantly better, however. "The median home in the bottom income bracket saw their available funds rise by merely £80 during the COVID years (across the pandemic timeframe), broadly the same as the two years pre-pandemic. On the other hand, the average household in the wealthiest fifth saw their cash reserves rise by £4,200," the report finds.
